2.10.10: Commercial Mortgage Alert Reports Slow Progress in Closing CMBS Conduit Loans

Commercial Mortgage Alert reported this week that although nine CMBS conduit lenders are actively seeking CMBS conduit loans for the first multi-borrower CMBS transaction since the CMBS market stalled in 2008, progress on accumulating loans for securitization has been slow. Informal discussions with the conduit lenders revealed that no lender has accumulated over $100 million of loans, well below the estimated $500 million needed to create an economical CMBS issue. As a result, a number of conduit lenders likely will team up to create a CMBS issue in excess of $500 million. Based on the slow pace of closings, a new multi-borrower CMBS issue may not be seen until at least the summer. However, once enough loans are gathered by a group of CMBS conduit lenders, it is expected that demand will be extremely strong for the CMBS. With no new CMBS issues since last year, CMBS is in short supply. CMBS prices continue to tighten based on the lack of new CMBS, economic recovery and low yields offered by alternative investments. “I think a new CMBS issue would be a ‘blowout’ to use a Wall Street term for a quickly sold issue,” said Michael D. Sneden, Executive Vice President of ValueXpress. “We have been trying to buy certain existing CMBS bonds and simply cannot find them for sale in the market. Plus, the loans included in new CMBS will be very conservatively underwritten, resulting in the best performing CMBS issues in the future.”

 

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This entry was posted in CMBS Conduit Loans, Commercial Lending, Commercial Real Estate Loans, Michael D. Sneden, Non-Recourse Loans, The Banker's Mortgage Conduit, Valuexpress and tagged , , , . Bookmark the permalink.

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